We talked to Doug Gates, KPMG, about how aerospace companies can capitalise on Industry 4.0 and play to their strengths.
Doug Gates is Global Chair of Industrial Manufacturing and Global Head of Aerospace & Defense at KPMG. He will present at Farnborough Airshow’s inaugural FINN Sessions next week.
The title of your presentation is Beyond the hype: Separating ambition from reality in Industry 4.0. Why this topic, and why now?
Over the last 18-20 months we’ve been working on Industry 4.0 we’ve seen a tremendous uptick in acceptance that to be competitive, both OEMs and critical Tier 1 and other suppliers within industrial manufacturing and aerospace and defence (A&D) are going to have to grasp the capabilities needed to compete with smart factories and smart products.
We’re also seeing, globally within A&D, a tremendous uptick in investment – not just in pockets of areas such as 3D printing, factory automation or advanced analytics and predictives for the aftermarket, but in more comprehensive capabilities and strategies on how to transform their businesses.
We’re in the first quarter of a four-quarter game around Industry 4.0 in A&D but we are seeing some leaders emerge.
We think that the surge in investment is going to accelerate quite heavily over the next one to four years.
You have conducted Industry 4.0 maturity assessments. Can you tell us more about that?
We created a maturity model across various dimensions, from technology to culture and talent, integration, cyber, etc. These were components that we and our clients specified as critical to enable a fully capable Industry 4.0 environment. We then created five steps of maturity within each of those bands.
Our consultants walked the factory floors, met with executives in operations, engineering and finance, to talk about the investments they’re making, the results that they were seeing, and where they are in that maturity journey across each dimension.
Our Beyond the Hype report came out of this benchmarking.
What were some of your key findings?
It is apparent that while companies are getting isolated gains, there are very few companies – and in A&D I’d say there are even fewer than in general manufacturing – that have truly realised the full potential of Industry 4.0, or developed a full end-to-end comprehensive strategy and investment plan to get them there.
We’re seeing some that are showing more pockets and more presence and are putting in more investment, but they still lack some key element of what I would call a truly integrated strategy for either connected smart plants or connected smart products.
What are some examples of this in practice?
A lot of work is being done in data and analytics – from a smart factory standpoint, for example, where companies are taking information off the various machines that run the factories, out of their supply chain systems, and modelling that into a flow that can be simulated. We’re seeing digital twins being used to simulate and optimise a factory flow in aerospace and defence and looking at how to use that then to both improve the way factories are run, as well as the cost it takes to truly maintain the factory and the equipment and the systems, and to then size the factory and the machines appropriately.
Where I talk about it being truly integrated or interconnected, it’s about how to take that information and connect through an Industrial IoT (Internet of Things) backbone, and connect the factory to the products and to the customer, and build an entire ecosystem that’s integrated and interconnected – feedback from customers on products, feedback from the aftermarket on performance. When that whole ecosystem is being pulled together is where the end state of Industry 4.0 is heading, and where the maturity model becomes a five.
You note that aerospace companies are somewhat lagging behind general manufacturers in Industry 4.0 transformation. Why is that?
In the dimension of robotics, for example, aerospace and defence is still at a level two on a five-step maturity model. Automotive may be at a level four, and then if you look at other companies like high tech, they are at a level five in that they’re producing so much via automation.
Some of this is by nature, though – if you’re looking at a commercial OEM; they’ll produce 600 to 1,000 aircraft a year. Roll it down the supply chain, and the suppliers are making five times that volume. You’re talking about products in the thousands, compared to automotive, that are products in the millions.
Automotive will fully automate – if you look at Tesla, they have fully automated the assembly line; they install interiors through a robot; they do all the metal and riveting, etc.
Aerospace and defence, because of the lower rate, typically can’t justify the investment in robotics at anywhere that level.
Are there any areas where aerospace is doing particularly well on your maturity assessment?
Yes, 3D printing – in both the concept and the actual use in production. Aerospace is still pushing the boundaries of new material powders for 3D printing. You look at the engine manufacturers and high temperature 3D printing compounds for blades and other components within the engine that are now being 3D printed and used in production.
Many other industries are struggling to move outside of research and development or limited pockets of components to actually produce real production parts.
It’s the blessing and curse thing again. A&D has lower rates of production, they have exacting standards, and 3D printing fits very well with that.
What are the common challenges that A&D companies are seeing in achieving this integrated approach?
Our Global Manufacturing Outlook report found that one of the key areas of talent required in the future for manufacturers — in fact the number-one new talent that they’re expecting to need – is data scientists.
We see the same opportunity in A&D, but just as A&D was very, very challenged to bring in software engineers, it’s hard to draw the best talent to look at A&D as a relevant marketplace for their skills, versus going to the Amazons, Googles and Oracles of the world.
How to attract this talent is probably one of the most significant challenges.
A&D companies are going to have to project themselves as having the right ‘cool factor’, the right reward system, to bring in that talent to support the needs around Industry 4.0 capabilities.
Also unique in A&D, we think, is data ownership and how to get access…as we’re putting more sensors on products like engines or avionics or landing gears to monitor how they are really performing and drive predictive maintenance schemes, etc.
In the case of OEMs, they ship theirs to airlines. Airlines ultimately say they own the data but if the airlines aren’t doing anything with the information, and not providing the data back to the engine manufacturer, then that data stream breaks and it’s impossible to keep up with reliable predictives. The same thing is true at the equipment level – they ship it to the OEM who says they have a right [to the data]. Even if the airline is sharing it with the OEM, does the OEM keep it and maintain value? Or do they share it down with their supply chain?
It’s the same issue with the government. Every government is struggling with how to lower the overall cost of operation for any of their fielded equipment, but, again, do they turn that data back over to the OEMs and to the supply chain to better maintain it for them, and has that level of a trust network been established?
Right now, each one of those data ownership issues is being knocked down one at a time by individual companies, rather than having a better structure and a true agreement and a trusted network in a win-win-win approach.
At the FINN Sessions next week, Doug will share some best practices and strategies to enable aerospace and defence companies to reap the rewards on Industry 4.0.